WYDZIAŁ INFORMATYKI, ELEKTRONIKI I TELEKOMUNIKACJI

Studia Podyplomowe

Systemy ERP – ścieżka SAP S/4HANA/Analiza biznesowa w systemach ERP

oraz BI (Business Intelligence & Information Management)

Praca dyplomowa

Special purpose equipment production process

in SAP S/4 HANA PP

Autor: Aleksandra Zawadka

Opiekun pracy: Paweł Woźniak

Kraków, 2023

I would like to sincerely thank the company Gambit Consulting for allowing me to participate in their

work and utilize a real business case as a foundation for my thesis. In particular I am deeply

thankful to Helen Jonas for her invaluable support in resolving various challenges that came along

while preparing the system demonstration. She also played a pivotal role in clarifying technical

aspects of SAP Production Planning module and provided a valuable feedback to my thesis.

Furthermore, I would like to extend my appreciation to Yat-Hey Yuen for his excellent guidance in

structuring my work and offering constructive feedback that contributed to my growth and

understanding of the role of SAP consultant.

Last, but not least I would like to deeply thank Wilfried Frank, my mentor during my internship at

Gambit, for his unwavering trust in my abilities. He has been a constant support during moments of

doubt and has shown immense patience while discussing the complexities of the SAP system.

I am very grateful for the support and encouragement I have received from all three individuals and

appreciate their contribution in shaping my thesis and the learning experience throughout the time

at Gambit Consulting.

  

 
TABLE OF CONTENTS 
 
EXECUTIVE SUMMARY ................................................................................................................. 5 
CURRENT SPE PRODUCTION PROCESS ................................................................................... 6 
1 REQUEST FOR A NEW SPE ......................................................................................................... 6 
2 DEVELOPMENT OF THE SPE ....................................................................................................... 6 
3 MATERIAL MASTER CREATION .................................................................................................... 7 
4 PROCUREMENT OF THE COMPONENTS ........................................................................................ 8 
5 SPE MANUFACTURING ............................................................................................................... 8 
6 USE IN SERIAL PRODUCTION .................................................................................................... 10 
7 STORING IN SPE WAREHOUSE ................................................................................................. 10 
CONCEPT OF SPE MANUFACTURING PROCESS ................................................................... 14 
1 REQUEST FOR A NEW SPE ....................................................................................................... 14 
2 PROCUREMENT OF THE COMPONENTS ...................................................................................... 15 
3 SPE MANUFACTURING ............................................................................................................. 16 
4 SPE STOCK KEEPING ............................................................................................................... 16 
SPE SYSTEM CUSTOMISING ..................................................................................................... 20 
1 SERIALISATION OF SPECIAL PURPOSE EQUIPMENT .................................................................... 20 
1.1 Serial number profile and assignment to the equipment. .............................................. 20 
1.2 Synchronisation of serial number profile and equipment number ................................. 21 
2 CUSTOMISING OF MATERIAL ASSIGNMENT TO ROUTING TYPE .................................................... 21 
3 PRODUCTION ORDER TYPE DEFINITION ..................................................................................... 22 
4 DEFINITION OF ORDER-TYPE-DEPENDENT PARAMETERS ............................................................ 23 
5 PRODUCTION SCHEDULING PROFILE .......................................................................................... 25 
6 MATERIAL AVAILABILITY CHECK ................................................................................................. 27 
7 CONFIRMATION PARAMETERS ................................................................................................... 30 
8 COLLECTIVE ORDERS (WITH AUTOMATIC GOODS MOVEMENT) ..................................................... 31 
PRODUCTION MASTER DATA ................................................................................................... 34 
1 BILL OF MATERIAL .................................................................................................................... 34 
2 WORK CENTRES ...................................................................................................................... 37 
3 ROUTINGS ............................................................................................................................... 37 
3.1 Parallel sequence of operations .................................................................................... 39 
4 PRODUCTION VERSION ............................................................................................................. 40 
PRODUCTION EXECUTION ........................................................................................................ 41 
FURTHER SUGGESTIONS FOR IMPROVEMENT ..................................................................... 51 
SUMMARY .................................................................................................................................... 54 
BIBLIOGRAPHY ........................................................................................................................... 55 
 

  
3 
 
LIST OF FIGURES 
  
Figure 1 Process flow with Software used  6 
Figure 2 Bill of Material in Team Centre  7 
Figure 3 Production Order in Current Situation  9 
Figure 4 Material Allocation to a Production Order  9 
Figure 5 SPE Change History in MM Text Field  10 
Figure 6 Stock location in Material Master  10 
Figure 7 Special Purpose Equipment Current Production Process Part 1  12 
Figure 8 Special Purpose Equipment Current Production Process Part 2  13 
Figure 9 Process flow with used Software  14 
Figure 10 Concept Production Process Flow Part 1  17 
Figure 11 Concept Production Process Flow Part 2  18 
Figure 12 Concept Production Process Flow Part 3  19 
Figure 13 Serial Number Profile in IMG  20 
Figure 14 Serializing Procedures  21 
Figure 15 Serialization Level  21 
Figure 16 Assignment of Material Types  22 
Figure 17 Production Order Type  22 
Figure 18 Order Type Dependent Parameters for PO. Planning View.  23 
Figure 19  Order Type Dependent Parameters for PO. Implementation View.  24 
Figure 20  Order Type Dependent Parameters for PO. Cost Accounting View.  24 
Figure 21  Order Type Dependent Parameters for PO. Display Profiles View.  25 
Figure 22 Production Scheduling Profile  25 
Figure 23 Production Supervisor definition  25 
Figure 24 Production Supervisor control  26 
Figure 25 Scheduling Parameters  26 
Figure 26 Scope of Availability Check  28 
Figure 27 Material Availability Check 1  29 
Figure 28  Material Availability Check 2  29 
Figure 29 Confirmation Configuration Setting View 1  30 
Figure 30 Confirmation Configuration Setting View 2  31 
Figure 31 Special Procurement configuration  32 
Figure 32 Special Procurement Indicator in MM  32 
Figure 33 Check Order Types general view  32 
Figure 34 Check Order Types detailed view  33 
Figure 35 Exemplary Bill of Material diagram  34 
Figure 36 Finished material - Bill of Material in SAP  35 
Figure 37 Semifinished material 1 - Bill of Material in SAP  35 
Figure 38 Semifinished material 2 - Bill of Material in SAP  35 
Figure 39 Variable Size Material calculation formula  36 
Figure 40 Variable Size Material BOM details  36 
Figure 41 Semifinished product 1 Routing  38 
Figure 42 Semifinished product 1 material allocation  38 
Figure 43 Semifinished product 2 Routing  38 
Figure 44 Semifinished product 2 material allocation  38 
Figure 45 Finished product Routing  39 
Figure 46 Finished product material allocation  39 
Figure 47 Standard and parallel sequences diagram  39 
Figure 48 Parallel Sequence Setting in Routing  40 
Figure 49 Production Version  40 
Figure 50 Production Order Creation (CO01)  41 
Figure 51 Serial number creation  41 
Figure 52 Purchase Requisition of NLAG Items  43 

  
4 
 
Figure 53 Purchasing Order allocation to leading Production Order  43 
Figure 54 Variable-size materials reservations  43 
Figure 55 Semifinished materials reservations  44 
Figure 56 Collective order release  45 
Figure 57 Routing with standard sequence  45 
Figure 58 Routing with parallel sequence  45 
Figure 59 NLAG material allocation to PO  45 
Figure 60 NLAG material direct withdrawal  46 
Figure 61 Operation Confirmation  46 
Figure 62 Collective Order Status after completing production orders for Semifinished materials  46 
Figure 63 Leading order operation 10 confirmation  47 
Figure 64 Material withdrawal after confirming the operation 10  47 
Figure 65 Confirmation of parallel sequence operation  47 
Figure 66 Confirmation of operation in standard sequence  48 
Figure 67 Leading Order material withdrawal  48 
Figure 68 Confirmation of further operations  48 
Figure 69 Leading Order Status after production completion  48 
Figure 70 Components Stock Levels after production is completed  50 
Figure 71 SPE Product Structure View  50 
Figure 72 Equipment Change with Room field  50 
 
 

1. EXECUTIVE SUMMARY

A System Migration into SAP S/4 HANA creates for a company a unique opportunity to

redefine its business processes and improve its operational performance through the use of

digital tools provided by SAP.

In the presented business case, the discussed department is a part of a well-established

original equipment manufacturer (OEM) in the aircraft industry. The department primarily

focuses on the development and manufacturing of special tooling, which serves as a

resource to support production of the end product.

Manufacturing process is inefficient

The current tooling manufacturing process, especially up the stream, requires substantial

manual effort. Some steps are executed with Excel spreadsheets and some with SAP, but

with only partial use or even misuse. This results in data redundancy and an inefficient

production process.

Execution of manufacturing fully in SAP will bring the efficiency

The concept presented in this work aims to provide an overview of the mechanisms in SAP

S/4 HANA that will bring the department to a level, where a transparent and traceable

manufacturing process of special purpose equipment (SPE) is a reality. It will focus on use of

master data and mechanisms available in SAP as a standard. The 3 main steps will help the

SPE department to streamline the process:

1. Maintain all materials only in SAP

2. Introducing serialisation for SPE sets.

3. Using standard master data in PP: bill of materials, routings, and production versions.

In the following document, these 3 points will be presented, together with the necessary

system configuration. Using a simplified example of production of SPE, its execution in SAP

will be then demonstrated.

The way ahead

Implementing the concept will require at first a significant effort from the team. Given the

variability of SPEs, introducing all components into SAP might be frustrating. In the long term

though the system will enforce the standardisation and eliminate redundancy of data in

various text documents. This will pave the way for the department for further automation and

significant increase of efficiency in daily activities.

2. CURRENT SPE PRODUCTION PROCESS

The term special purpose equipment refers to equipment utilised as an aid in production to

perform one or more operations during the manufacturing of a final product or its

components. There are several types of SPEs to be distinguished, including transport

trolleys, negative models for composite components, fixtures for machining centres, and

gauges for final product structures. These SPEs are either produced internally within a

dedicated production division or externally by contracted suppliers. Unlike regular materials,

SPEs are not consumed and can be reused.

A basic demonstration of the SPE lifecycle with used software is illustrated below (the size of

a bubble corresponds to the usage rate during the step):

Figure 1 Process flow with Software used

2.1 REQUEST FOR A NEW SPE

The request for a SPE arises during the construction of a new serial product or the

modification of an existing SPE. A special committee consisting of members from Production

Engineering, Production, and Maintenance decides whether the equipment should be

produced. The requirements are specified in a formal document, which is subsequently sent

with an email to the SPE process engineering. At this point the data is transferred to Access

Database with creation of a dossier for the particular SPE for further use during creation of its

material master in SAP.

2.2 DEVELOPMENT OF THE SPE

After opening the SPE-Material in SAP, its SAP-material number is copied to the PLM tool -

Siemens Teamcenter, where all technical drawings, bill of material (BOM) and other technical

documents for the SPE are created and modified.

The BOM contains following materials:

● Components/assemblies designed and used specifically in the requested SPE (one

time use). These materials have no material master in SAP and are added to the SPE

BOM as text data.

● Raw materials used for internal production of SPE or its components.

These materials have no material master in SAP and are identified by the SPE

material number and additional index, e.g., 60000-1 or 60000-2.

● Components used in serial production on regular bases.

These materials are listed in the BOM with their SAP material numbers 900* and up.

The bill of materials, when created in Siemens Team Centre, contains all the components. In

the illustration below, one can see that some of the components are added as texts and

others contain the SPE materials number.

Figure 2 Bill of Material in Team Centre

The BOM is then saved as a pdf document and sent with other technical documentation to a

responsible process engineer for procurement and production planning and execution.

2.3 MATERIAL MASTER CREATION

A SPE is created with a customised Material Type "ZBET" (special resources). The new

Material is assigned with the next available number from a defined range, which is from

600000 to 699999. One of the pain points that the department needs to deal with is the fact

that in case of sets of the identical SPEs, each will still receive a different material number.

The SPE-specific data is organised in material master as follows:

● Basic Data 1:

o Description field – this field is used to describe the product produced with the SPE

o Old material number field – represents the latest design revision of the SPE.

o X-Plant Mat. Status field - the functional maturity level of the SPE used for control

purposes of its application during manufacturing of the serial product.

● MRP 1:

o MRP Type – ND – no planning.

● MRP 2:

o Procurement Type E-internal production, F-external procurement, X-both (external

procurement and internal production).

o Production Storage location – the central storage location of the SPE is

maintained. / Receiving storage location for which the receipt of the SPE is

posted.

● Plant data/ Storage 1:

o Storage Bin – storage location in the SPE- dedicated warehouse.

2.4 PROCUREMENT OF THE COMPONENTS

Due to long lead times and limited information on the required SPE delivery date for the

serial production, it often happens that components and raw materials are ordered even if no

production order for the SPE is in the system. Since there is no demand created for the

SPEs, no material requirements planning and no BOM, the procurement of components is

not fully managed in SAP.

The SPE process engineer manages the purchasing of components and raw materials as

follows:

• Procurement of SPE- specific materials

To request an offer for the raw materials or components without an SAP material master, the

responsible employee uses Excel forms provided by suppliers. Twice per week material

requirements are collected with a goal of reaching minimum order quantity.

The purchase order for corresponding materials will be then created in SAP (ME21N) with

use of DUMMY in the Material field and detailed material and requirements description in the

item text field.

Status of the purchase order is managed with two folders: Order Confirmation-Pending and

Order Confirmed. Depending on the status the PO document will appear in the

corresponding folder.

In the incoming goods, the goods receipt is generated for the purchase order and the

ordered materials are delivered to the SPE department where the delivered goods are

quantitatively and qualitatively controlled.

• Procurement of standard materials

Standard materials are standardised screws, nuts, and bolts. The materials with 900*

numbers are managed with consumption-based planning strategy (with Re-Order Point ) and

proposed for replenishment after falling below the reorder point.

2.5 SPE MANUFACTURING

The responsible SPE process engineer opens a new production order by copying one of the

previous production orders for a similar SPE. He has an Excel list available with approx. 20

production order drafts that he will use as a basis and adapts the new order according to the

new requirements.

A new production order is created without header material, but the required SPE will be

allocated as a component to the operation 0010 in the order. The SPE description, reference

technical drawing and end product information are added in the material description field in

the header. Other materials required in the production process of SPE are allocated to the

first operation or noted in text fields.

Figure 3 Production Order in Current Situation

All the routings are created with a sequential order of operations, though some of them are in

fact executed in parallel. Required documents, such as production orders and technical

specifications or drawings, are printed multiple times to ensure their availability during

parallel operations.

All the manufacturing operations of the SPE are coded with 10, 20, 30, etc., whereas the

Quality Control and Logistics steps, after the product is finished, are numbered with 1000

and up.

The components are allocated to the first operation. Usually only the standard materials

generally used in serial production are allocated. The other materials, specific for the SPE,

are added as texts.

Figure 4 Material Allocation to a Production Order

Components picked in the central warehouse are collected in small trays and then placed in

the manual storage area. The shelves in the manual storage are organised according to an

identification system with small trays – each tray receives a post-It note with the first 3 digits

of the Production Order number. DIN standard parts and small gauges are stored in drawers

at the workstations.

The workers do a partial confirmation at a terminal in production at the end of each operation

and the shift supervisor does final confirmation of all using CO11N. The actual duration times

are tracked with the confirmations.

The SPE process engineer then updates the production order with factual data from the

production and confirms technical completion of the production.

The quality control is performed as a First Article Inspection of the serial production part and

is scheduled with a month buffer before an estimated requirement date. When reaching

Operation Nr 1000 the SPE is practically ready for use. The current Quality Inspection

process is though not discussed in this work.

2.6 USE IN SERIAL PRODUCTION

As mentioned previously each unit of SPE sets receives a separate material number,

however any changes done to the tooling, e.g., its usage history is documented in Basic Data

Text in Material Master and repeated for each of them.

Figure 5 SPE Change History in MM Text Field

2.7 STORING IN SPE WAREHOUSE

The finished and released for use SPE is then either delivered directly to the workstation or is

placed in the SPE warehouse. The warehouse has no management system available and the

location of a new SPE is entered in the material master’s section - Plant Data/ Warehouse 1

– General Data.

Figure 6 Stock location in Material Master

When the SPE is needed for serial production, production employees can retrieve it

independently from the warehouse. He needs to write down the relevant information on a

paper list hanging by the entrance to the warehouse. Later on, the responsible warehouse

employee enters the following information into the SAP:

● Post Goods Issue (MB1A) – Movement Type (333 – Withdrawal of unrestricted stock

for Sampling)

● Material Change (MM02) – Additional Data – Long text – Production Order Number,

SPE number from the Set if applicable, when and by whom it is withdrawn.

After use of the SPE for serial production, it is then returned to the warehouse. The transport

is recorded with the Goods Receipt transaction and Movement Type 334 – Booking back the

sample.

Figure 7 Special Purpose Equipment Current Production Process Part 1

Figure 8 Special Purpose Equipment Current Production Process Part 2

3. CONCEPT OF SPE MANUFACTURING PROCESS

After closely examining the current way of executing the SPE manufacturing process, one

can conclude that SAP system is indeed in use. However, many steps are either “semi-

standard” such as final product added as a component to the first operation in production

order. Other steps in process are “text-heavy,” with the majority of information recorded in

text fields in material master. As a result, obtaining the up-to-date information or automating

the SPE production process becomes time consuming and inefficient.

The aim of further part of this work is to present a manufacturing process mock-up with use

of prepared master data and standard solutions available in SAP S/4 HANA. It is the author's

sincere hope that the reader will acquire knowledge on how to configure the system and

implement specific concepts in order to achieve a transparent and straightforward SPE

production process.

At the highest level, the E2E process stays the same, but the majority of steps are executed

in SAP:

Figure 9 Process flow with used Software

3.1 REQUEST FOR A NEW SPE

The Special Purpose Equipment serves as a production resource for the manufacturing of

the main end product. The standard material type designated by SAP for this purpose is

Production Resource/ Tool (FHMI). Therefore, the SPEs receive this material type.

Other current material master settings are not considered in the concept and will not be

further discussed. Considering that demand for the SPE occurs spontaneously, the ND (no

planning) MRP Type seems to make the most sense.

In current situation, the material master needs to be first created in SAP to obtain the

material number and then the number is copied to Team Centre for the SPE design and

construction steps. Until the interface between the two software systems is established, this

part of the process must remain unchanged. Once it is indeed in place, the material number

for the SPE can be established in Team Centre first and then transferred to SAP.

In the suggested solution, the Bill of Material is created in the Team Centre and all the

components are copied to/ created and always managed in the SAP system. This is an

important precondition for the successful implementation of the concept discussed.

Additionally, once the interface between the TC and SAP is established also the BOM data

can automatically transferred and material master created.

3.2 PROCUREMENT OF THE COMPONENTS

SAP offers several options for managing procurement of “non-standard” components by

offering multiple material types in material master or item categories in bill of material.

Consequently, the thesis will concentrate on SAP standard solutions that provide

transparency and avoid unnecessary use of DUMMY type of materials and Excel

spreadsheets for ordering materials.

In presented case, the user can choose from following options:

● Non-stock Item Category/ Non-Stock Material (N-S)

Components that are used only once for the specific SPE and not kept on stock are

managed through the use of Non-Stock Item Category. Non-stock items can be entered in

the BOM with or without a master record. To enter a non-stock item without a master record,

a descriptive text must be entered in the BOM. For these types of components SAP

automatically generates purchasing requisitions in the planning run or directly when

production order is created. As the N-S materials are booked in upon delivery, they are

directly withdrawn in the production order. This eliminates the need for DUMMY data or long

texts in purchasing orders, as all necessary information is automatically copied from the

material master.

● Variable-Size Item Category (V-S)

Raw materials ordered in blocks, sheets, or metal bars can be set as Various-Size Items. In

the position details in BOM, the component’s dimensions must be maintained. It allows then

the system to calculate the sum of demand and trigger a purchasing requisition, in case of

material shortages. A more detailed description of V-S Items will be provided later in the text.

The procurement of materials with a reorder point remains the same as they are managed

with central procurement for the entire facility.

To simplify the material requirements planning for components in the SPE, it is suggested to

use the same MRP controller for SPE to each of the materials. It is recommended that the

planner runs the MRP Live transaction for the materials specified in the BOM using the SPE

MRP Controller type.

3.3 SPE MANUFACTURING

The presented production process anticipates that all components are maintained in the SAP

system.

Until now the SPE department has manufactured and stored around 40’000 equipment units

and gauges. This is a starting point and valuable data base for categorization of SPEs and

standardisation of their production process.

After the SPEs are categorised by the use or manufacturing process, the production can be

standardised with use of reference routings. In the future a responsible SPE engineer can

combine them into a routing in the new equipment production and only adjust necessary

fields based on the construction information. Copying of old production orders and cleaning

them from components allocations, texts, costs, etc. can then be eliminated, as the reference

routings contain only operations.

SAP allows to maintain standard and parallel sequences in the production. Since in the

baseline case both types are present, the proposed solution utilises the standard and

consequently will ensure that what is set in the system exactly reflects the factual production

process.

The Quality Check no longer occurs as an operation within the production order; instead, the

finished SPE will be first transported to the Quality Stock and eventually released for use and

stored in SPE Warehouse.

Additionally, the system is configured to automatically create an Equipment Master once the

material production order is saved or released. The material receives a serial number that is

synchronous with the Equipment number.

Quality Management of SPE is not part of the presented concept.

The Production Version is a mandatory master data element for executing the production

process in SAP S/4 HANA and will be discussed in further detail later.

One of the important challenges faced in the current situation are sets of SPEs that have the

same material number and the history of use and changes is tracked in a long text field in

material master. Furthermore, in this case a user can benefit from SAP standard solution,

which is serialisation of each SPE. At the point of creation or release of a production order

the equipment master is created and receives a number synchronous with the serial number

in the material master.

3.4 SPE STOCK KEEPING

Since there are no means or intention to implement a warehouse management system for

the SPE warehouse, the storage location needs to be maintained elsewhere. The Equipment

Master provides an opportunity for this, as the "Room" field can contain any text information.

In the Equipment Selection transaction IE05, the equipment storing location can be easily

found.

Having an Equipment set in the system, it can be then maintained in Production Maintenance

module, however, it is out of the scope of our concept.

Figure 10 Concept Production Process Flow Part 1

Figure 11 Concept Production Process Flow Part 2

Figure 12 Concept Production Process Flow Part 3

4. SPE SYSTEM CUSTOMISING

In the following chapter the required configuration will be presented. A Serial Number Profile,

necessary to distinguish each unit of SPE set, as well as settings for Equipment Master

creation will be described in part 4.1.

As the Special Purpose Equipment is intended to be used as a resource in the production

process of a main product, the Material Category is chosen according to its purpose - as

FHMI. The equipment though is produced in-house, which implies further configuration in

Production settings. Chapter 4.2 will explain how to enable in-house production of Resource

and Tooling materials. It will cover introduction of a new order type that distinguishes the SPE

production in the system and then it will focus on its parametrization, scheduling, material

availability check and confirmation of completion.

4.1 SERIALISATION OF SPECIAL PURPOSE EQUIPMENT

On top of the use of SPEs in the new planes production, its further purpose is their

maintenance and overhaul. Consequently, the SPE needs to be established in SAP as

Equipment, too.

Currently, when SPEs are manufactured, each identical unit receives a separate material

number, which results in an overflow of material masters for the same SPEs. However, this

can be avoided by introducing serialisation for the manufactured sets.

4.1.1 Serial number profile and assignment to the equipment.

The serial number profile acts as a prerequisite for identifying materials with serial numbers.

Each profile controls the following:

● The business procedures during which serial numbers can be assigned.

● Whether serialisation is mandatory, optional, performed automatically or not all.

● Definition whether equipment master record should or should not be created for each

serial number.

● Information about stock check and how the system should react in the event of

inconsistencies.

Customization path:

Logistics-General

→

Material Master

→

Sales and Distribution

→

Basic Functions

→

Serial

Numbers

→

Determine Serial Number Profiles

Serial number profile ZSPE defines that the serial number is created with SPE production

order creation or release processing. The serial numbers always refer to the order item.

Figure 13 Serial Number Profile in IMG

The serial number will be assigned to the Production resource/tools Equipment type. No

stock validation is required.

Following procedures are in place:

● PPAU - Serial Numbers are Created when the order is Created used in PP order.

● PPRL - Serial Numbers are Created when the order is Released used in PP order. If

a serial number requirement exists and no or not all serial numbers have been

assigned, the order cannot be released.

Figure 14 Serializing Procedures

4.1.2 Synchronisation of serial number profile and equipment number

The serial number and equipment number are kept synchronous. In the material master

record in Plant Data/Storage 2 the indicator Serialization Level - 1 is set.

Figure 15 Serialisation Level

Synchronisation of the equipment number with the material serial number allows to simplify

identification of the equipment in the shop floor. One can also identify the equipment with the

material number in transaction IE05.

4.2 CUSTOMISING OF MATERIAL ASSIGNMENT TO ROUTING TYPE

To enable manufacturing of Special Purpose Equipment as a FHMI Material type, the link

between the material and routing needs to be established.

The FHMI Material can be assigned to a Routing in IMG catalogue in the following path:

Production

→

Basic Data

→

Routing

→

General Data

→

Define Material Type Assignments

Figure 16 Assignment of Material Types

4.3 PRODUCTION ORDER TYPE DEFINITION

In general, SAP distinguishes three types of production: Make-to-Stock, Make-to-Order and

Engineer-to- Order. In the discussed case, the special purpose equipment is manufactured to

stock, as there are no customer orders triggering the demand. In order to differentiate the

SPE manufacturing process, an individual Order Type ZSPE was created:

Production

→

Shop Floor Control

→

Order

→

Define Production Order Types

Figure 17 Production Order Type

All the parameters: the Control Indicator, Reorganisation, Order Status and Cost Controlling

settings are copied from SAP standard MTS production order type (YBM1).

4.4 DEFINITION OF ORDER-TYPE-DEPENDENT PARAMETERS

Next, we define what data will be selected for the ZSPE order type when creating a

production order.

Production → Master Data → Order → Define Order Type Dependent Parameters

In section Planning:

● System selects automatically the first available Production Version.

● Selection ID determines the ranking or routing selection priority, its usage and key

status of the routing. For order type ZSPE a routing (N), with Status (4) Released

(General) for Production has a first priority and with Status (2) Released for Order has

a second priority.

● Check Operation detail defines whether operation detail screens are to be checked

when the operations are transferred to the order.

● Routing text defines if the text from the routing header is copied into the production

order.

● BOM application defines what type of usage the BOM alternatives are automatically

selected.

Figure 18 Order Type Dependent Parameters for PO. Planning View.

In section Implementation:

● Status change documents are created for all status changes, at each of the four

levels.

● Shop Floor Information System I01 is standard selection for data update. One can

carry out reports for materials, orders, work centres, etc.

● Documentation of goods movements specifies whether GR documents should be

created in reference to objects.

Figure 19 Order Type Dependent Parameters for PO. Implementation View.

Cost Accounting Tab:

Figure 20 Order Type Dependent Parameters for PO. Cost Accounting View.

Display Profiles Tab:

Figure 21 Order Type Dependent Parameters for PO. Display Profiles View.

4.5 PRODUCTION SCHEDULING PROFILE

SAP provides a standard Production scheduling profile to configure order controls to

automatically execute various actions, e.g., release of order on its creation, confirmation of

material availability for partial quantities or automatic goods movements. The production

scheduling profile is set at material level in Working Scheduling. In this way, a different set of

control for different kinds of producible materials can be defined. The production scheduling

profile is then copied into the order during order creation.

Production

→

Shop Floor Control

→

Master Data

→

Define production scheduling profile for DM

Figure 22 Production Scheduling Profile

In Profile ZSPE the order is automatically scheduled on release and document links for

materials are created. Other actions, such material availability check or goods receipt,

capacity planning or confirmations are set in master data.

Following controls can be set:

● Production Scheduler

Production → Shop Floor Control → Master Data → Define production supervisor for DM

Figure 23 Production Supervisor definition

● Scheduling Parameters for Production Orders

Production → Operations → Scheduling → Define Scheduling Parameters for Production

Orders

The scheduling parameters are set at the plant level for the order type and a production

scheduler. We can define that all the production supervisors can control ZSPE order type

scheduling parameters by adding “ * “.

Figure 24 Production Supervisor control

In Detail Scheduling we tick Generate Capacity Regulations to use a lead time of scheduling.

In regular type of scheduling the system check parameters set in Adjust scheduling field and

Availability of raw materials. In detail scheduling or so-called lead time scheduling the system

considers also timings given in each operation.

Figure 25 Scheduling Parameters

The Dates/ Times information in the Production Order Header is controlled with parameters

in Adjust scheduling.

4.6 MATERIAL AVAILABILITY CHECK

SAP determines the material availability in 2 ways:

● Against independent requirements:

o Used with, for example, strategy 50, 60, 52, 63, 74. (All other strategies use ATP

check.)

o Only planned independent requirements are taken into account

o No MRP elements (for example, stock) are taken into account

o No requirement to customise the checking rule

o The field Availability check is only used to determine the requirements passing

(daily or individual requirements)

● according to the ATP (available-to-promise) method. The system checks if the material

requirements can be covered on the requirements date. In case of material shortage, it

checks when the coverage can be ensured.

The ATP method takes into account available inventory in the required time based on

following formula:

𝐴𝑇𝑃 = (𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑜𝑛 𝐻𝑎𝑛𝑑 + 𝐹𝑢𝑡𝑢𝑟𝑒 𝑆𝑢𝑝𝑝𝑙𝑦 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦)− 𝐷𝑒𝑚𝑎𝑛𝑑

● Quantity on Hand – the inventory available for immediate use

● Future Supply Quantity – the inventory ordered or planned to produce, that will be

available on the required date

● Demand – all projected or already confirmed use of materials

The following applies only to the ATP checking method:

All the materials that need to be checked for their availability require setting a Checking

Group Key. It is allocated in Material Masters and determines how the system checks

availability and generates requirements for materials planning.

Another important setting for material availability check is the Checking Rule.

Following settings need to be in place:

● Checking Group – 02 – individual requirements

Production → Shop Floor Control → Operations → Availability check → Define checking

group

● Checking Rule – In the standard system in production orders is PP.

Production → Shop Floor Control → Operations → Availability check → Define checking rule

● Checking group and checking rule together specify the scope of the check:

o elements relevant to MRP (inward goods movements/outward goods movements)

are taken into account (for example, purchase requisition, purchase order,

planned order)

o which stock categories are taken into account

o whether replenishment lead time is checked

Figure 26 Scope of Availability Check

● In Order Control the connection between the Availability Check and the Plant with Order

Type is made.

Shop Floor Control → Operations → Availability Check → Define Checking Control

For Order Type ZSPE the material availability is checked during order creation (1):

Figure 27 Material Availability Check 1

and during order release (2):

Figure 28 Material Availability Check 2

4.7 CONFIRMATION PARAMETERS

Confirmations are used to book the completion of production quantities at each operation

(partial completion or final completion). Confirmation is not a receiving goods in stock, but a

declaration of production at each operation and of booking cost incurred.

For our order type ZSPE the confirmations are configured as shown below:

Generally Valid Settings:

In Checks under Operation Sequence one can define, if the system allows changes (e.g.,

skipping an operation) and what type of response it generates – message, information,

termination, error, or warning. In the selection chosen, the operations are allowed to take

place in any order.

Figure 29 Confirmation Configuration Setting View 1

Automatic backflush of all components for the ZSPE production orders, no matter what is set

in MM or Routing.

Individual Entry General:

● System automatically suggests Partial Confirmations as a default.

● The Error Logs are created in case of faulty Goods Movements (COGI)

Figure 30 Confirmation Configuration Setting View 2

4.8 COLLECTIVE ORDERS (WITH AUTOMATIC GOODS MOVEMENT)

A collective order is a network of planned or production orders across several manufacturing

levels. It is used for materials produced in-house and an order for the top-level material in the

hierarchy automatically generates orders for its semifinished products.

Collective orders can be used in:

● Make-to-Stock production

● Sales-order-related production (Sales-order-based mass production and MTO)

SAP distinct two ways of processing a collective order:

● CO with automatic good movements

● CO without automatic GM.

In the presented example we will use a collective order with automatic good movements.

In order to successfully process a collective order, the following configuration needs to be

set:

● Special procurement type for collective orders needs to be added in Configuration.

Production → Material Requirements Planning → Master Data → Define Special

Procurement Type

Figure 31 Special Procurement configuration

This configuration allows to indicate materials that will be processed in the collective order.

Materials that are manufactured with the lower-level order have the Special Procurement

indicator set in MRP 2:

Figure 32 Special Procurement Indicator in MM

The Automatic Goods Movement is set in Controlling configuration:

Controlling

→

Product Cost Controlling

→

Cost Object Controlling

→

Product Cost by Order

→

Manufacturing Orders

→

Check Order Types

Figure 33 Check Order Types general view

The goods movements between manufacturing levels are enabled in Cost Controlling . This

indicator is transferred into the order header (master data) of the orders. If there are differing

order types within the collective order, the setting of the indicator of the order type of the

leading order takes precedence. This indicator is transferred to all lower-level orders and

overrides their original indicators.

Figure 34 Check Order Types detailed view

5. PRODUCTION MASTER DATA

Having covered technical details, the Chapter 5 will present material master data, such as

raw, semi-finished or non-stock materials, as well as production master: bill of materials,

work centres, routings, and production version.

The production order for SPE will be created, together with equipment master and serial

number. We will observe collective order creation for semifinished materials, material

reservations for stock materials and purchasing requisitions for non-stock materials. As we

execute the production orders and confirm the finalisation of each operation, we will be able

to observe the automatic goods movements and material consumption at allocated operation

levels.

Based on the chosen scenario of a SPE production process, it will be shown how to leverage

SAP features: parallel sequencing and collective orders.

For the process simulation following materials were created:

● Finished material: 2574 – Special Purpose Equipment

● Raw materials

o 2581 – SPE Aluminium Block (0.5m x 0.5m x 0.2m), 20kG, B.U.M. = M3, MRP

Type VB, Planning Strategy 10

o 2582 – SPE Stainless Steel 5mm sheet (1m x 1m x 0.005m), 5kG, B.U.M. =

M3, MRP Type VB, Planning Strategy 10

o 2585 - SPE Label plate with inscription, MRP Type VB, Planning Strategy 10

o 2587 SPE O-Ring, MRP Type VB, Planning Strategy 10

● Semifinished materials:

o 2591 SPE Semifinished 1, MRP Type PD, Planning Strategy 70

o 2611 SPE Semifinished 2, MRP Type PD, Planning Strategy 70

● Non-stock materials

o 2583 – SPE red aluminium oval-head screw M6x10

o 2592 – SPE cylindrical head screw M10

All the created materials are allocated to SPE Controller .

5.1 BILL OF MATERIAL

Schematic representation of Bill of Material used in the exemplary scenario:

Figure 35 Exemplary Bill of Material diagram

Material 2574 Special Purpose Equipment BOM with quantities:

Figure 36 Finished material - Bill of Material in SAP

Material 2591 SPE Semifinished 1 BOM with quantities

Figure 37 Semifinished material 1 - Bill of Material in SAP

Material 2611 SPE Semifinished 2 BOM with quantities

Figure 38 Semifinished material 2 - Bill of Material in SAP

In two of the BOMs, the Raw Materials 2581 and 2582 are set as Variable-Size items. Let’s

shortly concentrate on the demand calculation for these types of items.

For the case of Variable-Size Items, the system automatically calculates the total quantity of

the raw materials required based on the sizes and the formula entered in the BOM.

The formulas can be defined in Customising in Production by choosing:

Bill of Material

→

Item Data

→

Define formulas for variable-size items

The two raw materials are aluminium block and stainless-steel sheet that have rectangular

parallelepiped shape. The used formula is presented below:

Figure 39 Variable Size Material calculation formula

The raw material requirement is calculated with following formula:

𝑅𝑎𝑤 𝑚𝑎𝑡𝑒𝑟𝑖𝑎𝑙 𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑚𝑒𝑛𝑡 = 𝑁𝑜.𝑜𝑓 𝑉𝑆𝐼 𝑝𝑒𝑟 𝐴𝑠𝑠𝑒𝑚𝑏𝑙𝑦 ∗ 𝑉𝑆𝐼 𝑉𝑜𝑙𝑢𝑚𝑒 ∗ 𝑅𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦

where:

One can assign the calculation formula for the material in BOM:

Figure 40 Variable Size Material BOM details

5.2 WORK CENTRES

Following work centres were created:

Work Centers

Description

SPE_MIL1

Milling 1

SPE_MIL2

Milling 2

SPE_ASS1

Assembly 1

SPE_ASS2

Assembly 2

SPE_INSC

Label plate inscription

SPE_4EYE

Final four-eyes control

5.3 ROUTINGS

Having defined a bill of material with required components and their properties, it is now

necessary to specify how they will be transformed to a final product. The routing describes

the sequence of the individual operations in the production.

In discrete manufacturing two types of Routing can be distinguished:

Routing – outlines sequence of operations in order to manufacture a material. A single

material can be created with several different routings, depending on a lot size ranges or

used processing techniques.

Rate Routing – is a reference set of operations not assigned to a material, as it is in

a routing. It comprises a frequently repeated operations in a production process to which

a recourse is made on a regular basis. The rate routing can be used as a template in

material-bounded routings in order to reduce the data entry effort. On top of it, the “normal”

routings are automatically updated every time linked rate routings are changed.

In our case, we will use material-related routing. An exemplary production process is

presented in the illustration YY.

In this example, each semi-finished component requires a separate routing for the milling

operation.

SPE Semifinished product 1 (Routing A):

Figure 41 Semifinished product 1 Routing

material allocation:

Figure 42 Semifinished product 1 material allocation

SPE Semifinished product 2 (Routing B):

Figure 43 Semifinished product 2 Routing

Material allocation:

Figure 44 Semifinished product 2 material allocation

SPE final product (Routing C)

Figure 45 Finished product Routing

and components allocation to operations 10 and 20:

Figure 46 Finished product material allocation

5.3.1 Parallel sequence of operations

In Routing C there are two production steps – assembly 2 and label inscription – that require

parallel execution. This type of sequence starts at operation 20 (assembly 2) in the routing C

and a parallel operation 10 (inscription) is triggered.

Figure 47 Standard and parallel sequences diagram

SAP differentiate sequence types with sequence category key

Figure 48 Parallel Sequence Setting in Routing

It is worth mentioning that parallel sequences can be created in routings and rate routings

only and not in reference operation sets or reference rate routings.

5.4 PRODUCTION VERSION

A production version is the link between the bill of material (BOM) of a product and the

routing. It determines which BOM relates to the relevant routing to produce a material or plan

a material. Depending on the lot sizes and validity dates there may be different production

versions for the same end product.

Figure 49 Production Version

6. PRODUCTION EXECUTION

The demonstration of a solution in the system starts with creating a production order with

transaction Production Order Create (CO01). In the example one unit of Special Purpose

Equipment will be produced.

Figure 50 Production Order Creation (CO01)

In the moment of saving the production order the serial number allocation takes place:

Figure 51 Serial number creation

The production order is created:

Example of Production Order document with standard and parallel sequences:

The Non-Stock Materials receive automatic Purchase Requisition can be viewed in Stock

Overview Transaction (MD04):

Figure 52 Purchase Requisition of NLAG Items

The Purchase Order is assigned to the created Leading Production Order :

Figure 53 Purchasing Order allocation to leading Production Order

Material reservations and results of Variable-Size Items Demand calculation can be viewed in

Stock Overview (MD04):

Figure 54 Variable-size materials reservations

Production Orders for Semi-finished materials can be viewed in Stock Overview transaction

MD04:

Figure 55 Semifinished materials reservations

As an example, for planning other components, a MRP Live function is presented. All the

materials can be selected for planning with the MRP Controller SPE. It is executed in

transaction MD01N:

In the chosen Planning Mode, the system deletes all the planning data and recreates the

planning data.

The raw materials are now available; therefore, a collective order can be released. This

action is then performed in Production Order Change transaction (CO02):

Figure 56 Collective order release

Leading Production Order Routing with Standard Sequence in detailed view :

Figure 57 Routing with standard sequence

And parallel operations:

Figure 58 Routing with parallel sequence

For the demonstration purposes purchased materials are delivered and booked with

Incoming Goods transaction (MIGO) for Non-Stock Materials:

Figure 59 NLAG material allocation to PO

Non-Stock Materials are surpassing the stock and are directly withdrawn at the production

order level:

Figure 60 NLAG material direct withdrawal

First the dependent orders production is performed and confirmed. The Operation

Confirmations are then executed in Enter Time Ticket for Production Order transaction

(CO11N). As set out in the configuration the goods movements are executed automatically.

Figure 61 Operation Confirmation

Collective Order Status after confirming production orders for semifinished materials:

Figure 62 Collective Order Status after completing production orders for Semifinished materials

Next the Operation 10 in leading order is confirmed in CO11N:

Figure 63 Leading order operation 10 confirmation

All materials are allocated to operation 10 and with the confirmation they’re withdrawn:

Figure 64 Material withdrawal after confirming the operation 10

Confirmation of the parallel sequence:

Figure 65 Confirmation of parallel sequence operation

Automatic Goods Movement takes place:

Return to standard sequence and confirmation:

Figure 66 Confirmation of operation in standard sequence

Last material is now withdrawn:

Figure 67 Leading Order material withdrawal

Further confirmations of completing production operations:

Figure 68 Confirmation of further operations

The Leading Order is now confirmed and SPE is delivered:

Figure 69 Leading Order Status after production completion

The Stock levels after production can be viewed in Stock Overview transaction (MD04):

● Aluminium Block 2581:

● Stainless steel sheet 2582:

● SPE Semifinished product 2591:

● SPE Semifinished product 2611:

● Raw material O- Ring 2587:

● Label plate 2585:

● Non-stock material has no stock:

● Special Purpose Equipment Stock level:

Figure 70 Components Stock Levels after production is completed

As set in the system the Equipment and Material Serial Number are identical. The Product

Structure can be viewed in the material master in Environment view.

Figure 71 SPE Product Structure View

Though there’s no warehouse management system available for the SPEs, the department

can still “book” the equipment in Change Equipment transaction (IE02) in Location view:

Figure 72 Equipment Change with Room field

The Production Order is then set as technically completed.

7. FURTHER SUGGESTIONS FOR IMPROVEMENT

The table below presents the comparison of the current situation with the concept and gives

an overview on further improvements/ open points that can be addressed once the SPE

department starts the digital transformation journey with SAP solutions.